Lean Practice: Cinch in the Waste

This leap year, why not make the most of the additional day with the subtraction of waste?

Lean practice may be defined as the relentless pursuit of the strategic elimination of waste. Through the continuous refinement of practices and procedures, lean management seeks to produce more goods more quickly while using fewer resources — less factory space, fewer worker movements and fewer assembly steps. Although often associated with manufacturing — Toyota and Danaher are proponents — it is also applied in service settings such as Capital One Financial Corporation. Here we define three types of waste and provide a framework for their identification in production and service processes.[i]

Waste

Lean[ii] identifies three types of waste:

• Muda: Non-value-added work, or any non-value-adding activity in the process
• Muri: Overburden on the worker resulting from poor management practices
• Mura: Unevenness in scheduling (variation)

Muda has been further divided into seven categories.

1. Overproduction: Producing ahead of demand or producing in excess of demand. Overproduction can be recognized by variation in the workflow, excessive finished-goods inventory and large batch sizes. Overproduction can result from an absence of procedural standards, poor forecasting and lengthy setup times.
2. Operators Waiting: Inefficient work sequence. Operators waiting for material or equipment setup and equipment sitting idle while other equipment is used are examples of this type of muda. Variation in production, lengthy setup times, poor equipment maintenance and low staffing all cause operators to wait.
3. Excess Transport: Workflow is neither direct nor smooth. Workflow with multiple zigzag movements and multiple material-storage racks creates inefficiencies that cause excess transport.
4. Motion: Unnecessary movements due to poor workplace design. Excessive reaching and bending in an assembly process or looking for documents or materials in a service process is also considered waste.  This can be caused by poor workplace design or a disorganized work space.
5. Processing Waste: Overprocessing in the system that adds no value to the product. Redundant processes and continuous changes in quality standards are characteristics of processing waste. They are caused by such things as unclear customer standards and poor process design.
6. Unnecessary Inventory: Inventory in excess of immediate needs.
7. Defects: Rework and scrap. Excessive scrap and customer complaints are indicative of defects. Improper material and poor-quality workmanship/design are causes of this type of muda.

Many organizations add an eighth category of muda:

• Untapped Creativity of the Workforce: Ideas for process improvement from frontline workers are not sought out or utilized.

The Cost of Muda

Whether in a service or manufacturing setting, muda, by definition, adds costs to the system in the following ways:

• The costs of rework and scrap
• Increased lead time due to motion, transport and waiting
• An increase in working capital requirements and product obsolescence due to large inventories
• Delays in identifying defects due to large batch sizes
• Unnecessary costs due to process steps that are not required or expected by the customer
• Lost opportunities for improvement because employees’ suggestions and ideas are not solicited
• Cost of idle resources
• Problems being hidden because of excess inventory

Gemba, Genchi Genbutsu and the Ohno Cirlce

To identify waste in a process, the manager must first “go to the gemba”: Go to the shop floor to get a firsthand look. Going to the gemba may take time and should consist of observation only, so that any subsequent decision is based on a thorough understanding of the process. Gemba is closely related to the concept of genchi genbutsu: Go and see for yourself. A manager must avoid isolation and limiting information to that supplied by reports, which are one or more steps removed from the gemba.

As Taiichi Ohno, the father of Toyota production, puts it, “Data is of course important in manufacturing, but I place the greatest emphasis on facts.”[iii] Ohno suggested drawing a circle on the floor in which to stand and then observe a process for eight hours to emphasize the discipline and patience the process requires.

The Muda Audit

Lean practitioners recommend that, at the initial phase of a waste audit, waste should be listed as observed; root causes or counter measures need not be identified. Suggestions and improvements should be made and brainstormed in conjunction with future activities.

This post is adapted from the technical note Looking for Muda (Darden Business Publishing), prepared by Darden Professor Elliott N. Weiss and alumnus Harry “Mac” Russell (MBA ’07), which includes a tool for conducting a muda audit.

[i] Because of lean’s roots in the Toyota Production System, many of the terms are of Japanese origin.

[ii] In keeping with its less is more ethos, the lean philosophy has come to be represented by the word itself, sometimes capitalized.

[iii] Jeffrey Liker, The Toyota Way (Columbus, OH: McGraw-Hill, 2003), 226.